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Equity Index Highlights - April 2018 edition

Release date: 13 Apr 2018 | Eurex Exchange

Equity Index Highlights - April 2018 edition

April edition

Market briefing

The market briefing, given by Markus-Alexander Flesch, Global Head Sales Equity & Index Derivatives, is packed with news and highlights ranging from Q1 trends and volumes to global macro-economic effects on volatility and what it all means for the Eurex product suite. Besides, he gives in-depth insights into Eurex core products.

With interest rates at a historic low, investors around the world seek safety, growth and yield. That is why dividend strategies remain an attractive alternative to low risk/low return fixed interest investments. With dividend season starting, we take a closer look at Eurex Exchange's dividend derivatives and the benefits they provide for investors.

The year so far has seen a strong growth trend in our Single Stock Dividend Futures, with approximately 1.6 million contracts traded as of end-March. Our EURO STOXX 50® Index Dividend Futures (FEXD) and EURO STOXX 50® Index Dividend Options (OEXD) have also gotten off to a good start this year: with more than 1.8 million contracts traded in FEXD and a promising 530,000 contracts traded in OEXD as of end-March, these products are definitely on many investors' radars. Read more.

The first quarter of 2018 saw Eurex MSCI products get off to a great start. Due to the advancing roll period, open interest and trading volumes gained traction in many established products and several new ones. On the futures side, growth was most pronounced in big regional indexes such as MSCI EM Asia, MSCI North America and MSCI Emerging Markets. On the options side, options on MSCI EM and MSCI EAFE grew the most.

Open interest across all MSCI futures and options grew by more than 61 percent in March 2018. Gains were even greater on the volumes side, which recorded an increase of more than 80 percent compared with March 2017. Volumes in options contracts gained 117 percent compared with the prior-year period.

In Q1 2018, an all-time daily record for equity index futures was reached with traded contracts exceeding 8.8m. This was largely driven by the EURO STOXX® Banks Futures trading 1.8m contracts. Eurex introduced sector derivatives in 2001 and has continued to expand its range. In doing so, Eurex has become the leading global exchange for sector-based products.

The EURO STOXX® Banks Options similarly experienced a sharp uptick in volumes, with an increased proportion being executed directly into the order book providing highly visible market depth. EURO STOXX® Banks Futures were not alone in showing good volumes in March (+ 23% YtM); EURO STOXX® Banks Options also fared well, recording + 24% YtM. So far, order book share has increased to some 40% in 2018 (compared to roughly 10% in 2017).

Since their introduction in May 2017, Eurex futures on six iSTOXX® Europe factor indexes have been a success: as of end-March 2018, 270,000 contracts had been traded. Open interest has increased continuously, currently standing at around EUR 200 mn. Amongst them, Value (FXFV) and Momentum (FXFM) attracted the majority of volumes traded.

The product suite offers various options. Beyond trading the single futures long only, they allow market participants to hone in on individual factor premia by going long the factor future and short the broader market via STOXX® Europe 600 (FXXP) Index Futures, or to replicate the index aggregate by equal-weighting all single futures and simultaneously short the market in an easy-to-implement 1:1 setup. Read more on the development of the iSTOXX® Europe factor index family in Q1/2018 in the "iSTOXX® Europe Quarterly Update" newsletter published by Alpha Centauri.

Events: Join our Derivatives Forum across EuropeThis year's annual Derivatives Forum will focus on the key issues that will shape the derivatives industry of the future - including product innovation across asset classes, fintech, and geopolitical issues such as Brexit - and assess how ready market participants are to face the challenges and opportunities that lie ahead. Join our product-focused breakout sessions, listen to our innovation panel and take the opportunity to network with your peers.

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